National Competition Council Recommendations



About this Item
SubjectsSmall business; Trade Practices; Federal State Relations; Finance: Federal; Rural Industry; Taxis
SpeakersBrown Mr Matt; Souris Mr George; Black Mr Peter; Hartcher Mr Chris; Andrews Ms Marie
BusinessBusiness of the House


    NATIONAL COMPETITION COUNCIL RECOMMENDATIONS
Page: 4375


    Urgent Motion

    Mr MATT BROWN (Kiama) [4.18 p.m.]: I move:

    That this House:

    (1) notes with concern the recommendations from the National Competition Council and their impact on New South Wales farmers, bottle shops, medical professionals and poultry growers; and

    (2) calls on the Federal Government to drop plans to penalise the New South Wales Government $51 million this financial year for failing to comply with its recommendations.

    Small and vulnerable businesses—bottle shop owners, pharmacists and farmers, to name a few—are under threat again from the national competition policy. The Federal Government says that unless New South Wales implements competition reforms, it will lose more than $50 million a year. That is not just a one-off loss. More than $50 million in Commonwealth payments will be lost each and every year. That loss will mean a reduction in the funding for health and education. It is the equivalent of 760 nurses salaries or double this year's funding for primary school class size reductions. The Premier has already written to the Prime Minister expressing his alarm at recommendations by the National Competition Council [NCC] that New South Wales face non-compliance financial penalties.

    I am concerned about a number of the NCC reviews, especially in relation to farmers, chicken growers, bottle shop owners, taxidrivers and medical professionals. The NCC recommendations could cripple the ability of farmers to hold onto their land during tough times like the recent disastrous drought. On Monday of this week I met dairy farmers in my electorate. They are facing financial difficulties. They could lose their right to mediate with lenders, thereby giving banks an open invitation to evict farmers without any form of negotiation. The reforms would also result in the removal of collective bargaining rights for chicken growers.

    New South Wales has demonstrated a strong and continuing commitment to national competition policy reform. The Carr Government has acted responsibly in implementing competition regulations that are delivering real benefits to the people of New South Wales. New South Wales has amended 90 per cent of the 216 pieces of potentially anticompetitive legislation, especially in relation to energy, water and transport. We have also established an environment that promotes systematic and transparent assessment of the costs and benefits of all proposed government regulations. The achievements of New South Wales through the national competition policy have been significant and comprehensive. The financial penalties recommended by the National Competition Council for comparatively minor matters of incomplete reform are completely unwarranted. These unnecessary and gratuitous reforms will destroy the investments of small businesspeople, who get involved in their communities and employ many people. We should not put their businesses at risk from large, impersonal corporations. That is the policy of the Liberal Party.

    The reforms that we are being forced to comply with, or pay $51.44 million in penalties, will only serve to impact unfairly on our local bottle shop owners, taxidrivers and medical professionals. The NCC is concerned that New South Wales liquor legislation significantly restricts competition for which a net public benefit justification has not been provided. The main restriction identified is the application of the needs test. The needs test assesses the need for a bottle shop in a particular area. It protects our communities from being flooded with new liquor outlets. This is particularly relevant following the conclusion of the Alcohol Summit, whose recommendations affecting the regulation of liquor included the need to control the availability of alcohol.

    Whereas the NCC has identified the needs test as having an anticompetitive impact, the New South Wales Government believes that the unregulated proliferation of liquor outlets would have an unacceptable impact on the community. The Carr Government's strongly held view is that a robust liquor regulatory regime must remain in place given the substantial harm associated with alcohol abuse in the community. The continued regulation of liquor is consistent with the clear message of the Alcohol Summit. The NCC recommendations that New South Wales be penalised by a permanent reduction in NCC payments is unwarranted and unfair. When I was speaking to some of my colleagues today, they mentioned the concerns of their local bottle shop owners. In particular, the honourable member for Illawarra and the honourable member for Wollongong said they had received representations, as I have, from local liquor outlets.

    At a time when taxidrivers are struggling to earn a living wage, the NCC believes that the New South Wales Government is deliberately withholding new licences and wants to flood the market with them. Nothing could be further from the truth. Contrary to this view, the Passenger Transport Act 1990 does not impose a quantitative restriction on the supply of taxi and hire car licences. Permanent taxi and hire car licences can be acquired from either the existing bundle of plates or from the Ministry of Transport at the prevailing market price. As there is no quantitative restriction on the supply of plates into the market, the strategy adopted by the Government to increase the number of plates in circulation was to offer short-term six-year plates at more attractive rates.

    Even at these lower rates there was a limited demand for plates. This would seem to suggest that the price of plates is not the only or even the key factor limiting market entry. The NCC simply does not understand the Sydney taxi market. People are not buying the licences because we have already got more taxi licences per head of population than Melbourne or Brisbane. New South Wales does not consider that any penalty is warranted. There are no quantitative restrictions, as asserted by the NCC.

    In addition, the NCC wants to permit unrestricted corporate consolidation in pharmacy, dentistry and optometry. The community expects that dental surgeries, optometry practices and pharmacies are owned and operated by professionals, not by faceless corporations who are not qualified to protect the health and wellbeing of our community. The Carr Government has previously set out in detail its reasons for retaining restrictions on employment and ownership. Essentially, the provisions have been designed to deliver most of the benefits of complete deregulation, but to also provide necessary protections to ensure the welfare of patients and the accountability of service providers.

    This is achieved through a robust exemption mechanism that allows, for example, non-dentist employers to be exempt from the rule if they have met public interest requirements. We want to keep this sector as one of family-run businesses. The public benefits from that type of business. We want only medical professionals to own and operate optometry and dental surgeries. The Howard Government's program is designed to change that position. Accordingly, the Carr Government is of the firm view that the exemption mechanism ensures that no detriment arises from the restrictions and that any penalty would, therefore, be out of proportion to the detriment. Likewise, the Government has given a commitment that restrictions are not intended to be used to protect incumbent business owners, but will be used to protect the interests of consumers.

    The Prime Minister described himself as a strong supporter of maintaining the traditional pharmacies owned and operated by pharmacists. I am sure that pharmacists will be as disappointed as I will be if the Commonwealth Government fails to back the Prime Minister's statement and forces New South Wales to remove the ownership restrictions for pharmacies. The achievements of New South Wales through the national competition policy have been significant and comprehensive. At this time it seems to me to be particularly important to remember what jurisdictions have accomplished rather than to dwell on minor areas where reforms have not gone as far as the NCC would have liked.

    The reforms proposed by the NCC are illogical and the imposed penalties are unfair and extravagant. New South Wales simply cannot afford to lose $51.44 million this year. That amount of money would put State government services under considerable financial strain. In view of the progress demonstrated by New South Wales over the span of the National Competition Policy Agreement, the proposed penalties are unjustified and completely inappropriate. I am pleased that the House voted to debate this motion for urgent consideration today. The munching member for North Shore is disappointed that we are debating this issue. I believe this is a significant issue that affects the gamut of our communities. Looking after our pharmacists, dentists, farmers, taxidrivers and liquor suppliers will result in a better and more cohesive community. I urge all members to support this motion.

    Mr GEORGE SOURIS (Upper Hunter) [4.28 p.m.]: There are two possible reasons why the Australian Labor Party has moved this motion today. First, a potential reason is it intends to embark upon a significant program of deregulation of the very industries the honourable member for Kiama has just alluded to. Second, and this is perhaps the more likely reason, it is another attempt to beat up the Federal Government for the shortcomings of the State Government. Time and again we hear the inadequacies of the State being loaded onto the Commonwealth whenever the Commonwealth and the State are in partnership in funding or administration. Whether it is hospitals, schools or roads, there is a consistent attempt by the Government to deflect attention from the inadequacies of State administration onto the Federal Government.

    An example of that is the upgrade of the Pacific Highway, which has experienced a $1 billion blow-out at the hands of the State even though the bulk of the funding has come from the Federal Government. It is a predictable pattern for the State to blame the Federal Government for the State's incompetence. One would think those opposite were doing the bidding of some hopeless Federal Opposition. Most of the points made by the preceding speaker reflect on matters that are within the purview of the State Government. I remind the House that it was the Premier, Bob Carr, and Paul Keating who signed up to the national competition policy on 11 April 1995, the beginning of the term of office of the Labor administration. It was one of the first acts of the new Premier after he was elected in March that year. One can only assume that, having initiated the Federal-State agreement on competition policy, the State Government would know the rules.

    A number of agreed tests and criteria has been established for debate and discussion in the implementation of national competition policy. It is up to the States, having signed the agreement and being participants in the National Competition Council [NCC], to put the arguments we have just heard—the arguments that the Coalition has been putting all along—to the NCC. I do not remember the exact time frame, but between four and six years ago vesting in the rice industry was raised. The NCC placed it under review and assessment and it was successfully argued that vesting was in the public interest and it would benefit Australia if it were to remain in place, and it has. As I said, I do not know whether the Government is using this debate to bash the Federal Government and to mask the fact that it intends to implement some of these deregulation proposals. I would be shocked if that were to happen. But why would I be shocked? After all, it was this Government that a couple of years ago under Minister Face issued a green paper about the deregulation of liquor stores.

    On 19 March 2002 and 8 October 2002 I issued media statements on behalf of the Coalition stating that the Coalition was completely opposed to the deregulation of liquor stores and, in particular, deregulation to corner stores and petrol stations. Honourable members should think about the message that we would be sending by having packaged liquor for sale at petrol stations where young people below the age of 18, but with a licence, would pull up to fill their cars. That would expose us to the enormous risk of the illegal purchased of liquor. The message it would send coupling drinking and driving would be disastrous. On a number of occasions the Coalition has expressed its complete opposition to the deregulation of bottle shops. Likewise, the Coalition has sought to protect the professional integrity and standards of various medical professions in the interests of the public of New South Wales.

    The poultry industry is characterised by many producers facing a market of only a few processors and, subsequently, only a few major retailers. That places poultry producers in a weak bargaining position. The importance of collective bargaining cannot be understated. Their case was argued successfully before the Australian Competition and Consumer Commission. There is plenty of substance in these issues for the Government to argue its case in the NCC, to which it is a signatory, and to succeed on behalf of the people of New South Wales, rather than failing or planning to implement reforms and then trying to mask its intentions by this attack on the Federal Government.

    I have a schedule issued by the NCC in respect of the state of progress of liquor store deregulation. Every State other than Victoria has successfully argued for the retention of the needs test. Victoria has only partially reviewed the situation and has retained an 8 per cent rule, which it proposes to assess and continue to review. In all of these cases, except Victoria, the council notes that it will assess progress. It seems extraordinary that the Government is trying to convey the impression that the game is all over, that the debate has ended and that the NCC has concluded everything, made a determination, advised the Federal Government and Treasury and that in some way competition dividends are to be withheld.

    I did not hear the preceding speaker say anything about, or table, any documentation indicating that the Government has been pressing the case to retain the needs test, collective bargaining or professional standards for registration of medical professionals. Where is the Government's evidence of its active involvement in the national competition process? If it has been involved, why did the honourable member opposite not incorporate that as the centrepiece of his speech? What has the Government done in negotiations as a participant in the NCC? What has been the outcome of its deliberations and presentations? What is the state of progress? What assessments have been made? What are the counter points and pro points? What is the relationship between those issues and other States and the NCC? I do not think honourable members opposite have done the work they should have done on behalf of the people New South Wales in respect of those industries.

    The honourable member for Kiama said that we are all under threat with regard to national competition policy dividends. The Government has said that every year since it signed up in 1995. However, a national competition policy dividend has never been withheld. These are matters for negotiation, deliberation, assessment, outcome and recommendation, in which the Government should be participating. Honourable members opposite are trying to extract cheap political points by arguing that the Federal Government is to blame for everything that they have failed to deliver. Day after day, question time after question time we hear "Let's blame the Feds." Honourable members opposite should grow up and deal with these issues like a proper, responsible, mature Government would do. They should deal with these issues on behalf of the people of New South Wales instead of hiding behind the cheap political rhetoric they have been peddling in this debate.

    Mr PETER BLACK (Murray-Darling) [4.38 p.m.]: I am pleased to support my Country Labor colleague the honourable member for Kiama. The term "NCC" has been used. Before I became a member of this place I thought that the NCC was the National Civic Council, with Santamaria, Mullins and so on—that unhealthy lot. However, I then discovered it was the Nature Conservation Council. I have heard some argument that it was a slight improvement. But today I am given to understand that it is the National Competition Council. Whatever the NCC really is, it is my firm conclusion that it has not improved. The honourable member for Upper Hunter said that this Government is saying that the Federal Government is responsible for everything that is going wrong. I do not agree. The Nationals are responsible for at least half of what is going wrong, because they refused to support us on the issue of single-desk rice marketing arrangements. In the very near future we will introduce legislation about the NCC.

    Wasn't it terrible yesterday when Australopithecus Murrumbidgeeitis was described as ignorant? I urge all members of this place who want an insight into the nature of The Nationals to read what our good Country Labor Minister, the Hon. Kerry Hickey, had to say about Australopithecus Murrumbidgee it is yesterday afternoon. I digress. I turn to the Farm Debt Mediation Amendment Bill, which was referred to by the leader of this debate. The bill was introduced on 17 September, and I had the great pleasure of contributing to the second reading debate. The real leader of the National Party at the time, the Hon. Ian Armstrong—for that matter, he is still the leader—that hoary old leader, is a great inspiration to all the people who used to support the old Country Party, because Stoner the goner is no inspiration to them at all. On 24 September in his contribution to the second reading debate the honourable member for Lachlan said:

    There is an old saying in this Parliament that nothing changes except the Act. When this legislation was introduced the Minister for Agriculture, who is in the Chamber, was a shadow Minister.

    He was referring to the Hon. Richard Amery. The honourable member for Lachlan continued:

    The roles are now reversed but, with respect to the Minister, I hope that that is not for too long.

    Well, he got another four years. The honourable member went on:

    Since the implementation of the Farm Debt Mediation Bill about 1,500 cases have been considered, 771 of which have been resolved satisfactorily. The Rural Assistance Authority established that about 445 farmers did not act in good faith …

    The source of these figures is marvellous. I am assured that as at a few days ago just on 940 cases had been considered, which is a little short of the 1,500. But I pay credit to the honourable member for Lachlan for telling a good story. Significantly, however, 88 per cent of the cases were satisfactorily resolved by way of agreement between the parties. I refer to what the honourable member for Upper Hunter had to say about Country Labor. I assure him that Country Labor is doing the right thing for New South Wales farmers. They need a crystal ball. Following the House's decision yesterday regarding urgency, today NSW Farmers issued a press release entitled "Federal Treasurer must reject NCC Farm Debt Mediation recommendations", saying that farm debt mediation must be retained. The press release reads:

    An end to Farm Debt Mediation legislation in NSW will remove a vital process that allows farmers and banks to resolve disputes.

    We have just been through a very unhealthy drought. The press release from NSW Farmers continues:
    Chair of the Association's Business Economics and Trade Committee, Charles Armstrong, is calling on the Federal Treasurer to reject National Competition Council recommendations that would penalise the NSW Government …

    Where are The Nationals, both Federal and State? I refer particularly to Warren Truss—that waste of space as a Federal Minister for Agriculture—and been-and-gone John Anderson. They are not defending New South Wales farmers, who are doing their very best to survive the drought in one piece. [Time expired.]

    Mr CHRIS HARTCHER (Gosford) [4.43 p.m.]: The Central Coast chicken industry is one of the great rural industries that still survives in that area—along with citrus growing and oyster farming—but it has gone through hard times. In recent years the industry suffered through the impact of Newcastle disease. It also suffered from the fact that the growers themselves are few on the ground and therefore lack a strong bargaining position and are very much subject to the dictates of chicken distributors.

    Accordingly, the Australian Competition and Consumer Commission gave poultry farmers the right to engage in collective bargaining. The commission acknowledges the weak bargaining position of poultry farmers. They are prominent not only on the Central Coast but also in Marulan, in the electorate of my colleague the honourable member for Burrinjuck, and in Tamworth and Maitland. Poultry farming is one of our great icon industries on the Central Coast. Accordingly, the Coalition has always strongly supported the poultry meat industry. A report provided by the NSW Farmers Association reads:

    The industry is unusual in that contracted farmers never own the poultry they rear yet contribute approximately 40% of the capital investment in the industry through ownership of farms, sheds and other facilities. As processors own the birds, are relatively few in number and are geographically specific, growers have little ability to exercise bargaining power by threatening to switch processors when negotiating contracts or base rates. The industry represents a clear case of monopoly market power which results in prices and quantities being suppressed below what could be expected in a competitive environment and for this reason the Poultry Meat Industry Act was implemented in 1986.

    The Poultry Meat Act allows poultry growers to collectively bargain and establishes a statutory committee, on which are represented growers, processors and independents. The role of this committee is to:

    1. Approve contracts between growers and processors based on minimum acceptable terms and conditions;

    2. Set growing fees for various classes of poultry production, and

    3. Mediate disputes between growers and processors.

    In practice, the Committee sets a growing fee based on model total cost of production for each group of growers which may be adjusted every six months according to cost and CPI changes.

    This legislation was subject to a national competition policy review in 1999. The conclusion of that review was that the legislation should be retained in the public interest, but substantially modified. A number of those modifications were reflected by this Parliament when, in 2002, it passed the Poultry Meat Industry Amendment Bill. The New South Wales Government commissioned a study by consultants, who concluded that the legislation imposes a small net public cost, equivalent to 1 per cent of the retail price of poultry meat, although the study has not been released.

    The Coalition expressed its concern about the need to protect the poultry industry. We have always recognised the industry's special position; it was recognised in the seven years we were in government, from 1988 to 1995. At that time we did not take steps to implement national competition policy in relation to the poultry industry. We continue to support the poultry industry on the Central Coast. The Coalition noted with concern the recommendation of the National Competition Council and its potential impact on the poultry industry. We invite the council to reconsider this aspect of its report. We believe that the existing arrangements are suitable for poultry growers and are in the public interest. Accordingly, we believe that this is one area in which the national competition policy may not be appropriate.

    Ms MARIE ANDREWS (Peats) [4.48 p.m.]: I am very pleased to support my colleague the honourable member for Kiama in this urgent motion. Honourable members would be aware of the importance of the poultry meat industry to many regional areas. I am pleased to note from the contribution of the honourable member for Gosford in this debate that it looks as though we will get bipartisan support on this very important issue. The poultry meat industry is a vital part of the local economies in areas such as the Central Coast, the Tamworth area, the Hunter, the mid North Coast, the North Coast and Western Sydney. In those areas the poultry meat industry means jobs; it means income for the community; it means a lifeline to help these regions survive and prosper. The Government is committed to fighting for the rights of chicken growers to retain their current collective bargaining system. They are working under enough difficulties, including the drought, without any added pressure from the Federal Government. We need to protect this important agricultural industry, and make sure our chicken meat farmers can continue their contribution to regional economies.

    In 2001 alone the industry injected $425 million into the State's economy, producing 244,000 tonnes of meat. In total there are 330 chicken meat farms in New South Wales producing poultry meat on a contractual basis for processors. They supply six processors: Bartter, Inghams, Baiada, Red Lea, Cordina and Sunnybrand. The use of centralised collective bargaining rights is a significant safety measure for the farmers. These bargaining rights help local growers achieve the best price for their produce and give individual producers closer to an equal footing when dealing with giant poultry-processing companies.

    Honourable members of this House may not be aware of the unique nature of the poultry industry that makes this kind of support critical. It is unique because the chickens never actually belong to the growers. Instead, processors provide the chickens, feed and other supplies necessary for the growers to rear the chicks. They then pay the growers on a per-bird basis to raise them to maturity. Clearly, the individual grower is not on an equal footing with the massive processors when it comes to negotiating price.

    There are also issues of geography. Many growers have access to only one processor, despite the fact that there are six in total in New South Wales. Clearly, the individual grower benefits from a system that gives the grower a little more weight in the bargaining process. This is where the Poultry Meat Industry Committee, established under the Poultry Meat Industry Act, comes into effect. The committee is a centralised body that oversees the price-setting process and approves contracts for all poultry growers. It includes both grower representatives and processor representatives. Essentially, this committee reduces the power imbalance between the big poultry meat processors and the small poultry meat growers. But the Poultry Meat Industry Act governing this committee is one of the many pieces of legislation that have come under attack from the National Competition Council [NCC].

    The NCC has recommended to the Federal Government that New South Wales remove the centralised collective bargaining rights for chicken growers. The Poultry Meat Industry Act, in particular, would be undermined. As the House has already heard, if the Commonwealth adopts this proposal the State Government would either have to comply or face a penalty payment of $12.68 million per year. With weaker legislation and weaker bargaining rights, these poultry meat growers would be left on their own to compete individually against the giant poultry processors.

    Where is the fairness in forcing small family farmers to negotiate individually against giant corporations? Let me spell out in more detail what this threat to poultry farming in New South Wales could mean. Put simply, this could spark an exodus of chicken growers from the industry. It could lead to a massive loss of jobs in regional areas, including the Central Coast. It could slash vital income in our communities. The State Government has been campaigning hard to prevent this from happening. It has been pushing the Federal Government to reject the recommendations of the NCC. We believe the position of the NCC will undermine the viability of poultry growers and generate significant structural adjustment problems. There is no evidence that the current system has hampered new growers from entering the market. There is also nothing to indicate that the current system is restricting innovation in the industry. In fact, growers' fees take into account different production methods to try to ensure that growers are not penalised for introducing efficiency.

    The Australian Competition and Consumer Commission [ACCC] has noted other factors which support our case for retaining the current system. The State Government strongly feels that the NCC has failed to consider the full range of factors impacting on the price of poultry meat. It has looked only at the production end of the chain, rather than at the retail end as well. The irrelevant Nationals are trying to manipulate farmers' fears and claim credit for forcing the Federal Government's hand. On the other hand, the State Government is committed to getting on with the job and campaigning on behalf of New South Wales farmers.

    Mr MATT BROWN (Kiama) [4.53 p.m.], in reply: I thank all members who contributed to this debate. I would like to address some of the issues that have been raised. I sense at this stage of the debate that there will be bipartisan support for the motion, and that will send a very strong message to the National Competition Council [NCC] and the Federal Government that New South Wales representatives in this historic Chamber are most concerned that such a large amount of money could be withheld from our State if we do not comply with their recommendations.

    The honourable member for Upper Hunter tried to turn this into a partisan debate. He said that we were trying to blame the Federal Government, and that we blame it for everything. We are not blaming the Federal Government for anything. The only reference to the Federal Government in the motion is to call upon it to drop plans to penalise this Government $51 million this financial year for failing to comply with its recommendations. We are asking the Federal Government to show some leadership, commonsense, and compassion to our small businesses and the farmers who do such vital work in generating income and employment as well as providing our food in this great State.

    The honourable member for Upper Hunter said that to validate its argument the Government should table evidence to substantiate its active involvement in the national competition process. There would not be enough time to do that, nor is this the place to table documents such as that. This is a place to put rational arguments and to try to get consensus on a very important motion so that we speak with a strong and unified voice. We have done our homework on this issue, as we have done all along. There are only a few recommendations that we do not want to comply with. We have complied with 90 per cent of the 216 recommendations, but on these key issues we want to look after small business, we want to look after farmers, and we also want to look after medical professionals throughout the State.

    Regarding liquor outlets, the honourable member for Upper Hunter used Victoria as an example. If the modelling in regard to Victoria were followed in New South Wales we would see an extra 6,000 outlets throughout the State selling liquor—after the Alcohol Summit made very clear recommendations to restrict the number of liquor outlets. I would like to know what value there was in holding such a strong summit when the National Competition Council withholds millions of dollars from this State because we try to act responsibly.

    I thank the honourable member for Murray-Darling for his contribution about the history of this issue and, in particular, the Farm Debt Mediation Bill. I am pleased that he informed the House of press releases by NSW Farmers, which has made submissions in an attempt to look after farming interests in this State. As I said earlier, on Monday this week I met a group of dairy farmers in Gerroa, which is between Kiama and Jamberoo, who were concerned about the National Competition Council putting pressure on the State. They do not ask for much; they just want to mediate with their banks, should the banks want to foreclose on their farms. That is not anti-competitive; it is fair, considering the hard work that these men and women and their families put into farming and protecting our land.

    I thank the honourable member for Peats for her comments about the importance of the poultry industry in her electorate and the need for fairness between the growers and the processors on the one hand—there only being six in the State—and the retailers on the other. It really is a David and Goliath scenario, and I believe she articulated the arguments for poultry farmers very well. I also compliment the honourable member for Gosford, who also gave a considered speech, and surprisingly said that the national competition policy was not appropriate in this instance. I thank all honourable members for their contributions, and I urge the House to support this motion.

    Motion agreed to.